Public Sector Corporate Governance Bill

via Public Sector Corporate Governance Bill | The Herald June 19, 2014

DRAFT PRINCIPLES OF THE PUBLIC SECTOR CORPORATE GOVERNANCE BILL
Following adoption of the Corporate Governance and Remuneration Policy Framework by Cabinet at its Seventh Meeting of 2014, it has now become necessary to transform the Framework into an Act. These principles therefore highlight the broad provisions of the envisaged Bill.

(a) Board Appointment, Management and Performance
It is proposed as follows:
i. That board members be selected on grounds of merit, based on a clearly defined capability matrix and skills mix, in areas such as legal, finance, marketing, audit, technical, human resources, strategic and economic planning.
ii. That a 50:50 gender representation and regional spread be factored into the selection of Board members;
iii. That a Corporate Governance and Delivery Agency be established within the Office of the President and Cabinet to co-ordinate and monitor compliance with the Corporate Governance Framework and the National Code of Corporate Government in Zimbabwe (ZIMCODE)
iv. That all Board members be required to go through a systematic induction and training programme;
v. That line Ministries should at the time of appointment of the Board, clearly spell out the mandate of the Board for their tenure of office.
vi. That Board members be required to declare their assets and sign a code of conduct upon appointment and to declare their interests before commencement of discussion of any agenda item in which they have an interest.
vii. That no Permanent Secretary should be a member of a public enterprise board. That Ministers should appoint appropriately qualified and experienced persons from their Ministries to sit through deliberations of the Board in an ex-officio capacity and report to the parent Ministry the gist of the board’s deliberations.

Limits to Board Appointment
viii. That no person shall sit on more than two boards of a public enterprise. Membership of a board of a public enterprise in an ex-officio capacity is not considered as relevant for purposes of this limitation.

Meetings of the Boards
ix. That all boards be appointed for a four-year term, which is renewable once;
x. That a member of the management or board of a holding company may sit on the board of a subsidiary company;
xi. That boards should meet on a quarterly basis, while any extraordinary board meetings are to be cleared first by the relevant Permanent Secretary;
xii. That all resolutions of the board should be submitted to the Minister and must be signed by the board chairperson, CEO and corporate secretary;
xiii. That all State Enterprises and Parastatals should hold Annual General Meetings, which meetings should be attended on the Government side by representatives from the Office of the President and Cabinet, Treasury, the parent Ministry, the Auditor and Comptroller General and other stakeholder Ministries;
xiv. That line Ministers should meet full boards under their jurisdiction at least twice a year;

xv. That a databank (directory) be created and maintained for all potential board members on a parastatal to parastatal basis, from which Ministers should pick nominations for approval by His Excellency, the President, when the need arises and
xvi. That in compiling the databank, invitations should be extended to all interested and capable Zimbabweans to submit their CVs for selection.

Committees of the Board
xvii. That every board should have separately constituted an Audit Committee, Finance Committee, Human Resources, Remuneration Committee etc.

(b) CEO Appointment and Performance
i. That the board and the Minister must agree on the person specifications for the CEO position and proceed to invite, through a press advertisement, applications to fill the position. Interviews will then be conducted by the Board with the assistance of professional Human Resource Consultants.
The Board will submit three recommended appointees for the CEO position to the Minister in order of priority, who will then submit his recommended candidate to his Excellency, the President for his approval;
ii. That the line Minister should insist on getting documentary evidence of compliance by boards with the procedures for the appointment of a CEO as outlined in (i) above;

CEO Performance
iii. That all decisions on the conditions of service of the CEO must be made by a resolution from a well constituted board meeting;
iv. That all External Audit reports must be submitted by the auditors directly to the Minister, in addition to the submission made to the board;
v. That the Office of the President and Cabinet should gazette all current appointments to boards and their tenure of office and should regularly through the gazette update such information;
vi. That CEOs and other senior management in State enterprises, parastatals and heads of local authorities be put on performance contracts;
vii. That boards and line Ministries should be strengthened in their capacity to negotiate robust Employment Contracts;
viii. That boards should evaluate the performance of CEOs on a quarterly basis and brief the line Minister on the results thereof;

CEO contracts
iv. That employment contracts should be entered into at the point of engagement and must clearly spell out what a CEO is entitled to as a severance package under the different scenarios of termination of service;
v. That CEOs should enter into four-year employment contracts which may be renewable once. The contracts should clearly spell out the minimum requirements, which if not met, should constitute grounds for termination of service,
vi. That there be strong monitoring and evaluation mechanisms to assess the performance of CEOs under the performance contracts entered with their boards of directors and
vii CEOs must report directly to the Permanent Secretary on a regular basis, including on all significant decisions, after management meetings.

RECOMMENDATION
Cabinet is hereby kindly requested to approve the principles in order to pave way for the drafting of the Bill.
Hon. P.A. Chinamasa M.P.
Minister of Finance and Economic Development